How to Setup Regional Sales Tax in Your PayPal Account
When running a web store and using PayPal as the payment processor, you can easily set it up so that PayPal will add the sales tax to the final amount (and optionally to the shipping amount as well) during checkout.
In a standard (perhaps traditional) PayPal transaction, the buyer will choose their items, and then be redirected to the PayPal site to complete the checkout. Once PayPal is able to determine the geographic location of the buyer is when the sales tax is added. In most cases this happens when the buyer logs into their PayPal account as that information is present in their profile.
At any rate, setting up tax rates in PayPal is very simple. PayPal doesn’t automatically determine the current tax rate though, it’s up to you to find the amounts for each region and then input the information.
Check with your accountant or other professional to determine if you should be charging tax for your product(s), and if so, to who.
In my case, selling software from Canada, I found that I must charge the appropriate tax based on the province/state of the buyer.
PayPal Sales Tax Setup Video Tutorial
Following are the Steps to Setup Regional Sales Tax in PayPal
That’s really all there is to it.
Now you just continue driving traffic to your store, let your shopping cart software handle the bulk of the transaction, then let PayPal take care of the sales tax and the payment.
